India’s decision to closely scrutinize the FDI originating in the seven countries it shares borders with—Afghanistan, Bangladesh, Bhutan, China, Myanmar, Nepal, and Pakistan—epitomizes its fear of China’s growing economic might. (Six other countries have barely any investment in India.) Chinese state enterprises are on a buying spree, looking to snap up companies on the cheap in the countries rocked by the novel coronavirus pandemic, fueling fears of a Chinese economic hegemony. India was spooked. In response, China says India’s new FDI requirements amount to violation of the WTO’s “principle of non-discrimination” as well as “the consensus of G20… to realize a free, fair, non-discriminatory, transparent, predictable and stable trade and investment environment.”
These are early signs that the post-coronavirus world will not be an easy place to trade and do business in. South Asia is projected to be among the regions that are hit the hardest by the pandemic, as their remittance-based economies struggle to tackle growing hunger and joblessness. International help will thus be crucial for the region to recover. Interestingly, even as India has restricted Chinese FDI, it is still importing gargantuan amounts of corona kits from China. Even in the post-corona world, this sort of push-and-pull relation between India and China will continue. One other area of potential conflict between them will be over the virus narrative.
Indian media has been ardently pushing the line that China is responsible for the ‘creation’ and spread of the virus. Even their more nuanced commentaries have a distinctly anti-China flavor. As India’s ex-foreign secretary Shyam Saran recently wrote in The Indian Express: “There is no escaping the fact that Covid-19 may not have become a pandemic if China were a democracy with a free flow of information… This is like original sin, which cannot be whitewashed.” In comparison, Saran lauds India’s ‘open and informed’ approach to the pandemic. He argues that during a crisis there are distinct advantages of being a democracy.
As representatives of the ‘largest democracy in the world,’ the Indian intelligentsia will look to further push this pro-democracy narrative. They will also help build pressure for the formation of a ‘concert of democracies’ both in and outside South Asia.
It is hard to say right now whether the post-corona world will be friendlier to the American IPS or to the Chinese BRI. The Americans and the Indians seem confident that China’s initial mishandling of the corona crisis makes the need for greater democracy self-evident. In this thinking, projects under the BRI will be seen suspiciously as countries will no longer trust the ‘corona-exporting’ China. In reality, the poor countries in the region, which are being further impoverished by the pandemic, will happily accept any help they can get.
As I have written in this space before, at least in Nepal, with the memories of the 2015-16 blockade still fresh, the anti-China narrative will be a hard sell. Indian meddling in South Asia is an old phenomenon, while the Chinese have only recently entered the fray. Countries like Nepal, Bhutan and Bangladesh would like to test for themselves if the Chinese can be trusted. Things won’t change so long as India continues to be seen as the regional hegemon.
